OPEC Leader Calls For Price Stability

Wednesday, February 07, 2001

Venezuelan President Hugo Chavez, who has emerged as a leading OPEC oil price hawk, said he did not want world oil prices to fall from last year's level, when they averaged their highest in 17 years. Despite complaints from the United States and Europe that high oil prices were damaging economic growth, the South American leader said current prices, about $2.50 per barrel below last year's average, were not high enough. "It is vital for us that the average oil barrel price is maintained around where it was last year, at $26.28 per barrel (for Venezuela's basket)," Chavez told a gathering of public sector workers. "This year the price has been below last year, to $22.70 (for Venezuela's basket), and we must get this average up to end the year at $25 or $26 which would be more than enough," he added.
Chavez, a former paratrooper who has drawn criticism from the United States for aggressive rhetoric on oil prices, has emerged as a key spokesman for OPEC's oil price hawks. The 11-member cartel last year set a $22-$28 per barrel price target for its basket of seven reference crude oils, but many members want that level raised after the basket averaged $27.55 per barrel in 2000, just below the band ceiling. Venezuela's oil price normally averages about $1.50 per barrel below OPEC's reference price. The United States, the world's largest oil importer, paid an average $30.20 per barrel for West Texas Intermediate crude oil in 2000, its highest level since 1983, prompting calls on OPEC to bring prices down.
Earlier on Tuesday, Venezuelan Energy and Mines Minister Alvaro Silva said he preferred a price between $25 and $28 a barrel for OPEC's crude oil reference basket, as anything below that caused "problems" for member countries.
"The official band is still between $22 and $28 but we have noticed that it can be between $25 and $28 without causing disturbances (to the world economy)," Silva told journalists after a meeting with investors.
"Below $25 it causes problems for the countries (of OPEC)," he added. - (Reuters)